Hayek Explains Bush on the Auto Bailout

Today from George Bush’s remarks announcing to use of TARP funds to bailout the auto industry — until they ask Obama for more later next year:

… [M]y administration worked with Congress on a bill to provide automakers with loans to stave off bankruptcy while they develop plans for viability. This legislation earned bipartisan support from majorities in both houses of Congress.

Unfortunately, despite extensive debate and agreement that we should prevent disorderly bankruptcies in the American auto industry, Congress was unable to get a bill to my desk before adjourning this year.

This means the only way to avoid a collapse of the U.S. auto industry is for the executive branch to step in. The American people want the auto companies to succeed, and so do I. So today, I’m announcing that the federal government will grant loans to auto companies under conditions similar to those Congress considered last week.

From Friedrich Hayek in the Road to Serfdom:

It may be the unanimously expressed will of the people that its parliament should prepare a comprehensive economic plan, yet neither the people nor its representatives need therefore be able to agree on any particular plan. The inability of democratic assemblies to carry out what seems to be the clear mandate of the people will inevitably cause dissatisfaction with democratic institutions. (p. 104, Chicago definitive edition).

Therefore, Bush is using blanket authority given in a bill almost everyone thought would be used to buy toxic assets from financial firms but which, in reality, gave carte blanche to the Executive branch. So despite the inability of our “parliament” to agree on a specific part of the overall macroeconomic rescue plan, the Executive knows this is what the people want. So they must have it.

UPDATE: According to a CNN poll 61% of Americans oppose an auto bailout. And 70% say it would be unfair to the taxpayer.

FURTHER UPDATE: David Beito asks a very relevant question over at Liberty and Power.